Fed Is Comfortable Pausing Here, Pimco's Wilding Says

Summary

PIMCO economist Tiffany Wilding said the latest core CPI report was mixed and confusing, with uneven tariff pass-through and government-shutdown distortions. She said the Fed is comfortable pausing rate cuts after 75 basis points of cuts in the second half of 2025 because policy is near neutral and the labor market is stable. She expects tariff pass-through, holiday pricing, inventories, a Supreme Court tariff decision, and fiscal stimulus to shape inflation early next year.

• Tiffany Wilding called the CPI report mixed and confusing.
• Softer goods prices contrasted with higher apparel and uneven tariff pass-through.
• Shutdown-related distortions added noise to the inflation data.
• The Fed has cut 75 basis points in 2025 and is now near estimated neutral.
• Wilding said the Fed is comfortable pausing rate cuts with a stable labor market.
• Companies may delay tariff pass-through until early next year after holiday discounts and inventory stocking.
• Fiscal stimulus and a large refund tax season could support the economy.
• A Supreme Court tariff ruling adds uncertainty to the inflation outlook.